Member Info for Voiceofreason1

Dumbly - exactly - but i just cant fathom why they wouldnt accept the higher tax from ogpm as a ‘free win’ and at same time secretly the oilers would be happy as ogpm is just much more business orientated in design

Is it just me or does that make no sense??

Kraken - the psc in SEA appear to be modelled on a kind of ratchet but ENQ definitely gain (at lower percentage) as prices go up. So for example we make say 15 dollars at 60 oil - but at 100 we dont make 55 - but an every decreasing amount of upside as it price goes up - a fair assumption would probably be 30 but as no-one knows exact terms of psc.

I then see that malaysia is more long/mid term contract price orientated but no clue how ‘mid’ term that is - so we may be lagging the uptick there. But there doesnt seem to be the same stipulation on vietnam so that psc will probaly be generating a decent premium over malaysia.

But lets be conservative and say 30 bucks a barrel for the 20kish we are producing there with malaysia smashing the volumes - still 600k a day - which we would have snapped the arm off at start of year and i do think thats a pretty conservative assessment

Then you work on the current 30k production in north sea with no works planned till later in may - and that is the driver (especially as that is physical forties based(ish)) I am really hopefull that year end production (given the leg up from malaysia especially) should beat top end estimates but i accept thats my heart doing some thinking there

It does just seem so weird - brent headline (future) price down sub 99 with a semi-full iranian block on hormuz with US now blockading anything that iran will allow through

Stats are there for all to see with basically 1-5 ships per day in last 2 days (pre war 130+) - this is reflected in physical premiums worldwide - but especially in Enq’s backyard of North sea and asia - with prices being circa 140-150 a barrel.

With Enq pumping circa 30k a day in north sea right now (as per our 50k+ in year end notes) and circa 20k in asia (profit share but profit is still clearly higher so we are gaining hugely) we just have to be patient and wait for an update on net debt paydown

Big question is do enq show their hand if they pay down say 100m of net debt or perhaps make announcement if they get to 300m level of net debt - or do we stay quiet (as i suspect) as announcing profits or basically being happy in oil seems to be akin to some horrific admission (and kills chat on epl change)

On that topic i am also perplexed why gov dont change to ogpm now - it increases tax on oilers in north sea at these price levels as i understand it - so you then can sell it to press but we all know that ogpm is much better for investment snd production at ‘normal price’ levels - it seems an easy win but yet isnt getting done

I do think this is seemingly being missed - granted it’s early days and all that - but what a pricing metric for companies supplying physical oil in north sea (and vietnam also showing physical premiums as well - although that is tempered by profit share in asia but we still get more when prices are higher!)

Stevo re your correction again it was small net positive fcf and as i stated earlier if they used sqz methodology for fcf they would have reported fcf over 100m (so really we’ll have to just wait and see on the full year figs)

As to other costs in 2026 i think leasing will be lower as the kraken lease is now a full year of 70% lower rather than lasts years first quarter at full whack. Net Interest costs decrease due to probable decrease in net debt (ie positive cash balances if oil doesnt suddenly drop to sub 68 again). And on the whole tax payment (i basically see it as tax) to malaysia and others - well i dont know the price of oil and gas for rest if year and i dont know how the psc moves but production looks good so again i’ll just have to see) but it means less epl at least for 2027 charge. I tend to optimism for both enq and sqz so i am also hoping for a beat in production im which case it all gets easier - we have an analyst in my bank who loves the title doctor doom so i know which way you tend :)

But we have our bet on 70 so lets enjoy the ride

So for sake of trying to put some numbers i think are implied here - when i looked at comparing like for like sqz to enq for fcf (as they use different methods ) i got this as a comparable for enq using sqz method

EnQuest equivalent: Ops cash $362.7m (embeds interest/tax paid $104m EPL) - cash expenditures $236m = $126.7m.

Now given this is based on enq getting circa 68 a barrel last year and production was 42-43k thats 8 fcf positive per barrel (so we’re down to 60) and this year ‘enq will pay significantly less epl’ guidance - i can kinda get to the 55(ish) world

Not saying thats 100% but i thought i would give it a go

Fyi i think asia raises breakeven floor this year with the whole psc type agreement (unless prices crash) but i suppose what i am saying is depends on your version of fcf

By the way - genuine question - leasing is something you always go on about stevo but dont enquest incorporate a lot of leasing costs in their opex? I can never find a 100% answer on that

I am getting whiplash here - steve are you now not backing up your ‘enq will have to raise at 11.625% for retail bonds’? I mean i offered you 9!!!! Jeezo

As to fcf bet - go on then - fcf defined by enquest full year report 2026 then calculated back by barrel split - as we have covered countless times i actually own enq and sqz so the whole doom mongering of enq you do while extolling sqz when enq actually made positive fcf last year at sub 70 while sqz was negative fcf at sub 70 oil always makes me chuckle (and this even hides fact that using sqz fcf calculation method where they made loss Enq would have made a 100m+ more in fcf)

Anyhow i digress - i accept 70 breakeven fcf bet ln fcf as per ENQs methodology (for record clearly i hope sqz smash it this year for my personal gain!)

But yes fcf as defined by ENQ go on then

My only issue with the oil price being at these levels is all our targets suddenly play harder to get. Its great we make oodles of money just now but there is a downside - anyone producing oil is making a lot more as well

Stevo no bet with me? I’m hurt - first come first served surely - i will stick with my 9 even with your 11.625 to match hy claim in my head as a saved point for future reference… :)

Sek i dont mind you saying what it was priced at - that’s clearly a fact but the ‘in your head’ point was to your ‘rescued by iran otherwise would have remained at 10p’ which is clearly a personal conjecture and not based on any fact - which could be right in fairness but could be nonsense clearly as a lot of other things happened as well ie magnus, asian continued success, extensions of contracts etc - that was my point on the upgrades coming out out with pre iran pricing incorporated in to their upgrade

But yeah i bought at 10 - and have bought at 36! So 20 seems a fair enough entry point

Oi profitaker i deliberately didnt mention the market discount - if you wouldnt educate steve pre the bet that would be much better thanks…..;)

I actually think hunbahs point is correct - there is clearly an assumption in output ie barrels, oil prices (clearly) and profit share (ie if it changes with higher output - unless you know the psc details which i cant find anywhere)

Sek re the ‘would be at 10p’ thought - i mean clearly thats an ‘in your own head’ assertion and you’re your own boss but it should be noted that all the recent upgrades are based on the pre iran oil price decks - more mentioning the asian expansion and great position of enq with the tax advantage and the firepower of the rbl. Iran clearly hugely positive to enq but arguably that is still not reflected due the the debt prisoner issue - hence sqz trading at such a premium to enq (i know some people would say thats all about future production for sqz - but as a sqz shareholder i would say the production mishaps at sqz mean thats discounted (deffo is in my investment decision))

Now my contention (and might be smashed away if oil falls massively) is that enq get stuck into debt that completely changes picture for enq (more than production for sqz) which is why i own more enq that sqz right now

But to be clear i want them all to fly!!!

Steve happy to bet you - wont exceed 9% for the retails

50 to charity?

As stated i own them all (with regards to enq and sqz specifically i bought all the way down so quite happily in money but dont claim any credit for that other than being stubborn!) - but have to say idea of ENQ having to pay up for retail bonds (to 11%+) when they raised their 9% seems ludicrous to me - as their credit rating was lower and their net debt at time was 1.2bn at the time of last raise :)

I mean retail bond holders might be getting tougher but lets see but from my perspective thats just a bonkers assertion

My personal guess is they wont have to raise as much as well - some more doomster people seem to think otherwise but lets see i guess

Ha - i am long enq, sqz, hbr and shell!!! And just to wind up some people on this chat i am also long renewables….(actually people forget a higher gas price helps renewables providers massively in uk as its the marginal price used to price renewable energy)

Have to say i agree given current oil environment that enq looks better placed based on fact its valued as a stock on the breadline/debt prisoner and i (as someone who has traded professionally my entire career) dont believe market ‘prices in’ things as efficiently as steve seems to believe - people lull themselves, herds form and theres a huge inaction time to news imho

Saying all that i like the sqz chat on here - from an enquest point of view its hugely better priced by market on ev/ebitda and fcf multples so a great bellweather of where we could be soon with ENQ - i mean we are priced at a third or less that SQZ on a number of measures and ultimately its a debt issue - which seems to be on the right path. But this is a convo for 3 months time…….

I do think this DT article is a bit of clickbait for people just wanting to have something to be scared about. In summer europe and uk use a lot less gas and renewables are kicking up nice chunks of power - its why norway picked this time of year as their demand drops from thei customers. Now in Germanys case they will be trying to fill reserves but our storage capacity is so small its pretty much pointless to worry about but all in all its a planned outage to match demand cycles

I saw the article and rolled my eyes at it - its up rhere with another article about uk running out of meds because they tend to fly via dubai

Imo anyway!

Btw Debt repairer is a possible doubling of valuation (which would still be a decent discount to sqz on the multiples

I’ve said this a lot - but fact is its all about debt. We are priced as a ‘debt prisoner’ - sqz is priced as a ‘cash generator’- if we get net debt down to 300m then we will possibly get rerated to ‘debt repairer’ which is why AB always looks at debt to ebitda (and likely why investments like malaysia with safe income are also there as diversification of revs also helps on that rerate)

Now with prices in triple digits this could happen in a quarter(ish) but until then we will always be discounted to sqz

Frac i just read it - its a ludicrous report - so even tho its an update on 26th march they still use $67 for oil - the grounds for downgrade (to be fair 25 to 24p) was gas production in asia falling in 2027 which they seem to have read in the full year report somewhere. Now they then ignore the 50% increase above target this year in seliga driven by malaysian gov request but hey ho!

So they have a fairly chunky decrease in revs in 26 based on oil price below last year…although their estimate for epl is $57m for 2026 which makes much more sense at least (although they then estimate epl in 2027 (ie for 2026 production) back up at $112 even with massively low oil price)

I think its a bit of a mess but i trade equities and therefore think most analysts dont know a lot generally! ;)